The People’s Bank of China has reported a significant increase in the use of the yuan for cross-border trade, with payments and receipts rising by 21.1 per cent year on year in the first eight months of 2024.
This surge reflects Beijing’s ongoing strategy to elevate the yuan’s status in global commerce as detailed in a report by the South China Morning Post.
The report further stated that, in total, cross-border yuan transactions reached 41.6 trillion yuan, equivalent to approximately US$5.9 trillion, from January to August this year. Notably, payments and receipts related to goods trade accounted for 26.5 per cent of all settlements, including those made in foreign currencies. This increase demonstrates a growing acceptance of the yuan among international trading partners.
Despite this growth, the yuan’s share of global transactions saw a slight decline, dropping to 4.69 per cent in August from 4.74 per cent in July, according to data from the Society for Worldwide Interbank Financial Telecommunication (Swift). Nevertheless, this marks the tenth consecutive month that the yuan has maintained a share above 4 per cent, securing its position as the fourth most widely used payment currency globally.
The dominance of the US dollar remains unchallenged as it continues to be the preferred currency for invoicing, investment, and reserves in international trade. However, China’s push for greater yuan usage is perceived as part of a broader strategy to enhance its political influence on the global stage.
This increase in yuan usage aligns with China’s ambitions to reshape international financial systems and reduce dependency on the US dollar. Analysts suggest that as more countries engage with China economically, they may increasingly adopt the yuan for trade settlements, further solidifying its role as a global currency.
As China continues to advocate for the yuan’s expanded use, businesses and governments around the world are closely monitoring these developments. The potential for increased yuan adoption could lead to significant shifts in how international trade is conducted and how currencies are perceived on a global scale.
Therefore, the rise of the yuan in cross-border trade is not just a numerical increase but a strategic move by China to assert its influence and reshape economic relationships worldwide. As these trends evolve, they will undoubtedly have lasting implications for global commerce and finance.
